Educational articles

The Positive and Negative Effects of a Strong Aussie Dollar

Understanding the effects of currency movements is essential to successfully investing in the stock market. You cannot assume that a strong exchange rate means strong economic growth. Like the stock market, the exchange rate can be determined by the sentiment of buyers and sellers and not on fundamentals. That is, exchange rate movements may be driven by speculation. A strong exchange rate may affect the economy in different ways. These are the negative and positive implications of a strong Aussie …

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5 Ways to Reduce Losses in your Stock Portfolio

The share market is the best performing asset class over time. It is however, the most volatile. It is a reality that you will have losses along the way. The key of course is to minimise those losses as much as you can. There are several strategies which can be implemented to reduce losses in your portfolio. Higher risk means higher return but the risk can be mitigated by using some of the following methods. The 5 ways to reduce …

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What bonds can reveal about the share market

The bond market is watched closely by professional traders in the equity markets. The “smart money” often uses the bond market as a predictor of what will happen in the share market. One reason is because it can give indications as to where the economy is going. For example, high interest rates can be a negative for share markets, as we wrote about in our blog “Why rising bond yields is bad news for the stock market”. Predicting the Economy …

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How the government can affect the economy

Governments try and stabilize the economy by maintaining good growth, high levels of employment, and balanced inflation. This can be done through fiscal and monetary policy to influence the prices of goods and employment. The state of the economy has a direct impact on the stock market as it would affect the ability of companies in generating profits. Expansionary policies can lead to increased demand and employment. This in turn can lead to more spending which then increases earnings for …

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What are the causes of a recession?

A recession is defined as two consecutive quarters of negative growth of the country’s GDP. Australia has not had a recession for the last 26 years. Having said that, we have had a low growth environment for the past few years. Recessions affect the stock market as it impacts the ability of individuals to invest in the market. It also affects the ability for companies to generate growth. These are the main causes that can help lead to a recession. …

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